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Help for struggling homeowners urged

Help for struggling homeowners urged

Category: Mortgages

Updated: 21/12/2009
First Published: 21/12/2009

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

The Government has been urged to extend a safety net for homeowners to ensure that repossessions do not continue to rise in 2010.

The UK Housing Review 2009/10, published by the Chartered Institute of Housing (CIH) and the Building Societies Association (BSA), identified the importance of government initiatives to protect homeowners at risk of repossession and called for an extended credible safety net to be put in place for the long term.

Useful temporary measures have included reducing the nine month delay before unemployed home owners can get help with their mortgage interest payments under the Support for Mortgage Interest (SMI) scheme, deferring the reductions in the SMI standard rate of interest and extended forbearance policies provided by lenders.

The number of repossessions are expected to be lower in 2009 than the peak of 76,000 in 1991, although the outlook for 2010 remains uncertain.

Recently published analysis from ConsultCIH, CIH's consultancy arm, predicts that if interest rates begin to rise steadily in 2010, people who have taken out a mortgage in the past four years, and those who have remortgaged in the past five, are more likely to be at risk of repossession.

Meanwhile, research published by the BSA has shown that the sooner a borrower contacts their lender or obtains free independent money advice, the greater the chances of them staying in their home.

The research found that 97% of borrowers who fell into arrears during the last two years have remained in their homes, demonstrating the effectiveness of the approaches taken by the vast majority of lenders.

"A long term safety net for vulnerable home owners is essential if we are to support people to stay in their own homes throughout the recession and beyond," said Richard Capie, CIH Director of Policy and Practice.

"Falling into mortgage arrears is always a worrying experience for the individuals involved and every repossession represents a great personal tragedy," added Paul Broadhead, BSA Head of Mortgage Policy.

"We have long suspected, and research now proves, that if a borrower contacts their lender as soon as they realise that they may face difficulties, the overwhelming majority manage to repay their arrears and stay in their homes."

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